Still no clarity on Zimbabwean tax, says Aquarius

Aquarius Platinum is seeking clarity from the Zimbabwean government on a tax that could derail an $82m expansion project at the Mimosa mine it shares with Impala Platinum.

Aquarius is working on two projects to expand production: Mimosa and the Kroondal tailings treatment project in SA. Last year, Aquarius had four projects on its books but it has since agreed to sell its Everest mine to Northam for R450m cash and it has completed the installation of three mills at its Platinum Mile tailings treatment project.

A recently completed prefeasibility study showed the Mimosa project was economically viable and the capital needed was $82m, an increase from the $40m estimated in the scoping study results released in August last year.

"Fiscal and regulatory stability in Zimbabwe plays an important role and we’ll have to get a firm understanding of that with our regulators in Zimbabwe to work towards a situation where we are comfortable as shareholders, being Impala and ourselves, to commit that capital," CEO Jean Nel said on Wednesday. "I’d like to say that I have every confidence we’ll be able to do so."

The Zimbabwean government tabled an export tax of 15% on revenue in 2013 to force mining companies to beneficiate their minerals in the country. The tax was deferred to last month and while Finance Minister Patrick Chinamasa has said it has been pushed back again to January 2017, this has not been gazetted.

A document seen by Bloomberg in Zimbabwe said Mimosa would be shut by the additional tax because it would start making losses.

Liberum estimated that the tax would reduce Mimosa’s cash margins from $182/oz to $17/oz.

At its mothballed Marikana mine next to Kroondal, Aquarius has put the 200,000 tonnes per month processing plant up for sale, but it would ideally like to use it within the company for expansion, Mr Nel said.

The shaft at Marikana will be folded into the Kroondal mine.

"We are not actively looking to sell the plant but if anyone comes with a cheque it will go out the back door," he said.

Aquarius, which shares the Kroondal mine with Anglo American Platinum and the Mimosa mine with Impala Platinum, reported a headline loss of $30m for the six months to end-December compared with a loss of $22m a year earlier. Production attributable to Aquarius rose 5% to 175,831oz of platinum group metals.

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Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.